MNST - Stocks To Watch: Energy Market Drama And Financial Earnings Headline Holiday Week

2024-01-13 10:30:00 ET

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The energy sector could be the focus next week as crude oil futures (CL1:COM) continued to bounce around after U.S. and British airstrikes in Houthi-controlled areas of Yemen added to the rising tensions in the Middle East. Oil tanker stocks and shipping stocks rallied on Friday off the development. The earnings reports will also begin to ramp up during the holiday-shortened week, led by financial companies. Heading into the Q4 earnings season, consensus EPS estimates have been cut by 6% since September vs. a typical 4% reduction in estimates. However, earnings breadth, which is the total number of companies with positive EPS growth, is expected to improve for the third straight quarter. The event calendar for the week ahead includes a Samsung (SSNLF) Galaxy Unpacked event, Needham Growth Conference, and several speeches by Federal Reserve officials and shareholders vote for Spirit Realty Capital (SRC) on the acquisition offer from Realty Income (O). The crypto market could also see another high-volume week of big swings. Seeking Alpha analyst Bram de Haas has a breakdown of what the bitcoin ETF approval means for the crypto stocks.

Earnings spotlight: Tuesday, January 16 - Morgan Stanley (MS), Goldman Sachs (GS), PNC Financial (PNC), and Interactive Brokers (IBKR).

Earnings spotlight: Wednesday, January 17 - Prologis (PLD), Charles Schwab (SCHW), U.S. Bancorp (USB), Kinder Morgan (KMI), and Alcoa (AA).

Earnings spotlight: Thursday, January 18 - Truist Financial (TFC), KeyCorp (KEY), Fastenal Company (FAST), and Birkenstock (BIRK).

Earnings spotlight: Friday, January 19 - Ally Financial (ALLY), Comerica (CMA), Fifth Third (FITB), and Travelers (TRV).

Volatility watch: Options trading volume has moved higher on Cytokinetics (CYTK) amid report of takeover interest. TeraWulf (WULF) has also seen more options bets placed on it than normal activity. ESS Tech (GWH) and Bakkt Holdings (BKKT) both have an elevated level of short interest outstanding on them. The most overbought stocks per their 14-day relative strength index include Elevation Oncology (ELEV), RayzeBio (RYZB), and Daseke (DSKE). The most oversold stocks per their 14-day Relative Strength Index include Global Mofy Metaverse (GMM), AAR (AIR), and DocGo (DCGO). Albertsons Companies (ACI) and Kroger (KR) will be watched, with the timing agreement on their merger due to expire.

Dividend watch: Companies forecast to increase their quarterly dividend payouts include Targa Resources (TRGP) to $0.75 from $0.50, Pinnacle Financial (PNFP) to $0.24 from $0.22, Fastenal (FAST) to $0.38 from $0.35, and NRG Energy (NRG) to $0.40 from $0.375.

IPO watch: Companies with blocks of shares rolling off their IPO lockup period during the week include Oddity Tech (ODD), BioNexus Gene Lab (BGLC), and ABIVAX (ABVX). Of the three, Oddity Tech is the only one trading above its IPO pricing level. The analyst quiet period expires on Linkage Global (LGCB).

Energy watch: Oil prices will continue to be watched closely after a surprise buildup in U.S. crude stockpiles undercut the threat to supplies from recent escalations in the Red Sea. More oil tankers have diverted course from the Red Sea following air and sea strikes by the U.S. and Britain on Houthi targets in Yemen, which could push up freight rates as ships take longer routes to Europe and the Eastern seaboard of the U.S. There is also an intense deep cold snap forecast for Texas that could spike electricity demand and create anxiety over pipelines freezing. Third Bridge analyst Peter McNally noted that oil fundamentals deteriorated during the second half of 2023, but at the outset of 2024, the factors driving supply and demand are less certain. He highlighted that seasonality and weaker global economic growth caused oil inventories to climb over the past four months despite OPEC+ cuts that were an attempt to balance the market. While the higher global stocks of oil are seen providing a buffer to small disruptions, the escalation of conflict on the Arabian Peninsula is said to be shaking the crude oil market out of complacency. Looking ahead, some risk exists that the Houthis turn their attacks from the Red Sea to the oil fields of Saudi Arabia to threaten the excess inventory. On Seeking Alpha, VettaFi Research advised that investors wanting exposure to oil and gas producers should consider a Texas-oriented approach. The firm's Alerian Texas Weighted Oil & Gas Index includes Diamondback Energy (FANG), ConocoPhillips (COP), Pioneer Natural Resources (PXD), Occidental Petroleum (OXY), and Exxon Mobil (XOM) as top holdings.

Investor events: Monster Beverage (MNST) will hold an investor Meeting on January 16 in New York City to provide an update on the company's business and operations. Goldman Sachs expects the event to be a positive catalyst for the stock. Analyst Bonnie Herzog noted that management will be in-person for the first time in the past several years and will spend time fielding investor questions. "Overall, we expect mgmt to deliver a compelling presentation highlighting the strength of its innovation pipeline and health of the underlying energy drink category (growing ~HSD%)," she noted. Samsung (SSNLF) will hold its Galaxy Unpacked event on January 17 to showcase new products in the Galaxy S24 series and unveil Galaxy AI. The company has previewed that the AI system will be a comprehensive mobile experience and provide universal intelligence on users' phones. Cloud connectivity is expected to provide advanced capabilities for Galaxy AI. Some of the notable conferences next week include Needham Growth Conference, the Sidoti Micro-Cap Conference, the Water Tower Research Furniture/Furnishings Virtual Conference, and the B. Riley Healthcare Conference.

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